Leaders who’re shaping digital technique face a basic dilemma: Ought to they attempt to disrupt the market, utilizing digital applied sciences to reshape each the worth chain and efficiency expectations? Or ought to they attempt to adapt, utilizing digital applied sciences to reinforce the corporate’s current worth chain? This selection has vital implications for a corporation’s efficiency, but many leaders battle to border the choice.

It’s tempting to suppose {that a} digital disruption technique is at all times your best option. Netflix famously redefined buyer expectations within the film rental market by making content material accessible instantly and ended up rewiring the business worth chain by transferring away from mail-order DVDs and towards platform streaming. However different examples illustrate the potential pitfalls of a disruption technique, corresponding to elusive or considerably delayed earnings. For instance, Peloton got down to disrupt the house health business, however firm efficiency plummeted as clients canceled subscriptions and logistics operations failed. And Uber — one other poster youngster of digital disruption — had $32 billion in cumulative losses over 14 years earlier than it lastly turned a revenue.

What concerning the firms which have succeeded with an adaptation digital technique? Our analysis studied each adapters and disrupters. Think about Australia’s main retailer, Woolworths: It adeptly integrated digital applied sciences to bolster its logistics operations and enrich clients’ cellular buying expertise, nevertheless it additionally remained a basic brick-and-mortar retailer (one that’s worthwhile to today). Different established retailers, corresponding to Carrefour, Tesco, and Walmart, additionally applied profitable digital methods that centered on adapting as a substitute of disrupting conventional retail operations. But one doesn’t have to look far to see the dangers of an insufficient adaptation technique. Mattress Bathtub & Past, Borders, Circuit Metropolis, Pier 1 Imports, and Toys R Us are all examples of retail firms that did not adapt nicely sufficient.